Killing the business goose that lays the golden eggs

Opinion: 24 June 2026

The first piece of advice that Treasury should give every incoming government should be fifteen words: there is no high-wage future for Australia without thriving businesses to pay those wages. 

This advice would be aimed at clearing up misunderstandings about where first world wages come from.

Here’s how the mechanism works: when businesses are thriving they bid against each other for workers and wages go up in a sustainable way. The converse is equally true: when businesses are struggling they stop bidding for workers and wage growth ends.

A prosperous and confident business sector is the indispensable element of ensuring ongoing first world wages in Australia. There is simply no other pathway to generating such broad-based sustainable wage growth.

Once you understand this central mechanism of prosperity, you realise the significance of making sure that businesses are flourishing.

Unfortunately, too many policymakers do not understand the central mechanism. They take our inherited prosperity for granted. They treat businesses as disconnected from future prosperity.

These policymakers load up business with all sorts of onerous burdens year after year – extra taxes, extra regulation, extra interference in wage setting – and then wonder why Australia’s productivity and income growth performance is at historically low levels. 

The latest manifestation of this mindset is the Budget’s heavy tax targets on capital gains and trusts. These measures are estimated to raise over $85 billion over ten years, a large part of which will fall on business. 

The results of these higher taxes are predictable. The penalty on investing in Australian business will result in less investment in Australian business.

That means fewer new factories, less construction, fewer upgrades of plant, equipment, and IT. It means less entrepreneurialism, less innovation, and fewer business willing to take chances. And it means fewer businesses able to create jobs and pay good wages. 

It means we are effectively eating our future. 

Recall the Aesop’s fable about the goose that regularly laid golden eggs. Impatient for more gold, the owner decided he needed to get the eggs inside, but after killing the goose it dawned on him that he had cut off his future prosperity.

By thinking it can extract more gold from the business community, the government is actually harming the business goose that produces the regular golden eggs for Australia. 

The imposition of large tax penalties is short-sighted policymaking that neglects the need for our tax system to be supportive of investment in business. 

Countries that have made themselves attractive for investment show the enormous benefits that flow to their broader communities. 

Introducing highly competitive business tax settings in Ireland in the late 1990s stimulated enormous ongoing investment and income growth, transforming the Emerald Isle from what was one of the poorest income countries in Western Europe into what’s known as the Celtic Tiger.

In our own region Singapore’s highly competitive business tax settings have similarly stimulated enormous investment and income growth, to the point where once-poor Singapore’s GDP per capita now exceeds Australia’s. 

These countries show what’s possible when governments adopt long-term thinking and decide to make doing business attractive. They have cannily expanded the number of geese laying golden eggs. 

It’s beyond time that we shake off our Australian complacency. We need to stop loading new burdens on business thinking ‘she’ll be right,’ and switch to an approach that recognises a flourishing business sector as the critical ingredient for sustainable future wage growth.